An increase in current liabilities will have which one of the following effects, all else held constant? Assume all ratios have positive values.

  • decrease in the quick ratio

A firm uses 2008 as the base year for its financial statements. The common-size, base-year statement for 2009 has an inventory value of 1.08. This is interpreted to mean that the 2009 inventory is equal to 108 percent of which one of the following?

  • 2008 inventory expressed as a percent of 2008 total assets

On a common-base year financial statement, accounts receivables will be expressed relative to which one of the following?

  • base-year accounts receivables
According to the Statement of Cash Flows, an increase in interest expense will ____ the cash flow from ____ activities.
  • decrease; operating

According to the Statement of Cash Flows, a decrease in accounts receivable will _____ the cash flow from _____ activities.

  • increase; operating
The U.S. government coding system that classifies a firm by the nature of its business operations is known as the:
  • Standard Industrial Classification code.
The formula which breaks down the return on equity into three component parts is referred to as which one of the following?
  • Du Point identity
Relationships determined from a firm’s financial information and used for comparison purposes are known as:
  • financial ratios.

Which one of the following standardizes items on the income statement and balance sheet relative to their values as of a common point in time?

  • common-base year statement

A common-size income statement is an accounting statement that expresses all of a firm’s expenses as percentage of:

  • sales.